New bill eliminating rental tax has $14M impact to Scottsdale

By Melissa Rosequist
Mail | Twitter: @mrosequist_

A new bill signed by Gov. Katie Hobbs to repeal residential rental tax beginning in 2025, will have big financial implications for Scottsdale — taking an estimated $14 million away from city coffers.

Hobbs signed the legislation on Tuesday, eliminating the rights of cities and towns to impose a local sales tax on home and apartment rentals beginning January 2025. It has a statewide impact of $230 million, according to Capitol Media Services.

Scottsdale officials say the city will generate an estimated $14.7 million in the current fiscal year from residential rental tax.

“Eliminating the rental tax hits Scottsdale very hard,” said Scottsdale Mayor David D. Ortega. “We are evaluating an annual revenue reduction of at least $14 million, money that is a critical part of how municipal governments around the state deliver essential services. During the legislative session there was discussion about making cities ‘whole’ by increasing State Shared Revenues — which never materialized. Scottsdale contributes hugely to state revenues, and we will fight hard to restore our fair share in the next legislation session.”

Of the $14.7 million Scottsdale expects from residential rental tax, about $10 million goes to the general fund, that helps pay for police officers, fire fighters, parks maintenance, senior centers and libraries. An additional $2.4 million is dedicated to transportation funding.

Hobbs’ decision to sign the bill is reportedly in exchange for the passing of Proposition 400, a half-cent Maricopa County sales tax that funds transportation.

“The legislature’s decision to send the regional transportation sales tax renewal (Proposition 400) to the voters is appreciated. This action, however, removes a substantial source of operating revenue, money that is needed to serve Scottsdale’s residents, businesses and visitors,” a Scottsdale spokesman said.